Pampers Health Spa (PHS) Assignment Example | Topics and Well Written Essays - 2250 words

Pampers Health Spa (PHS) - Assignment Example 2325540 =? 2325540 1 – (Variable Cost / Sales)] 1 - 0.499 0.501 Break-even point= ? 4641796.41 (Atrill & McLaney, 2011) Margin of safety % = Current sales level – Break- Even Point Current sales level Margin of safety % = ? 2965000 -? 4641796.41 = (56.55) % (Atrill & McLaney, 2011) ? 2965000 Task 3 Payback period method Proposal 1 The project requires an investment of ?900,000 and it generates cash as follows: ?270000 in Year 1; ?295000 in Year 2; ?345000 in Year 3; ?325000 in Year 4. The payback period is 3 years ?270000+ ?295000= ?565000 in the first two years + ?335000 of the ?345000 occurring in Year 3). Payback period method= ?270000+ ?295000+?335000= ?900,000 ?335000/ ?345000 =0.971 Payback period= 2+0.971=3 years Proposal 2 The project requires an investment of ? 750000 and it generates cash as follows: ?160000 in Year 1; ?189000 in Year 2; ?225000 in Year 3: ?254000 in Year 4. The payback period is 3.7 years ?160000 + ?189000 +?225000 = ?565000 in the first thre e years + ?78000 of the ?254000 occurring in Year 4). ?160000 + ?189000 +?225000 +?78000= ?750 000 ?176000/ ?254000=0.693 Payback period= 3+0.693=3.7 years Accounting Rate of Return Accounting Rate of Return =Average net income / Average investment (Davies & Pain, 2011) Proposal 1: Average net income =90000 + 98000 +75000 + 65000 = 328000/ ?900,000* 100= 36.44% Proposal 2: Average net income = 60000 + 70000 + 95000 + 125000 = 350000/ ?750 000 * 100 = 46.67% Net Present Value methods NPV= -Co + C1/1+r + C2/ (1+r) 2 +†¦+ C n / (1+r) n (Davies & Pain, 2011) -Co= Initial Investment, C = Cash Flow, r = Discount rate, n = Time Proposal1 NPV= ? (900,000) + ?270000 / (1+0.893) + ?295000/ (1+0.797) 2 + +?345000 / (1+0.712) 3+ ?325000 / (1+0.636) 4 NPV= ? (900000) + ? 247865.60176 + ? 91353.8957 + ? 68755.2314+ ? 45368.2506 = ? (446,657.0206) Proposal 2 NPV= ? (750000) + ?160000 / (1+0.893) + ?189000 / (1+0.797) 2 + +?225000 / (1+0.712) 3+ ?254000/ (1+0.636) 4 NPV= ? (750000) + ? 84521.9 229 + ? 58528.4281 + ? 44840.3683 +? 35457.0328 = ? (526652.2479) Total Expenses Fixed cost (70%) Variable cost (30%) ? ? ? Motor Expenses 8900 6230 2670 Insurance 28700 20090 8610 Rates 20400 14280 6120 Premises 1680000 1176000 504000 Wages and Salaries 1445000 1011500 433500 Repairs & renewals 54700 38290 16410 Professional charges 17500 12250 5250 Advertising 67000 46900 20100 Cost of Sales 483700 Total 2325540 1480360 Contribution ratio = Sales/ total variable cost = ?1480360 / ?2965000 =0.499 Task 4: In order to ascertain the financial position of Pampers Health Spa’ (PHS) it is necessary to carry out a financial analysis as it measures the financial performance of the enterprise in terms of profitability, leverage, and liquidity in its operations. As the management of Pampers Health

Business Statistics Essay Example | Topics and Well Written Essays - 250 words

Business Statistics - Essay Example All activities within the business will be evaluated and implemented in a unified manner. Third, quality management ensures all employees are involved in the running of the business, thereby guaranteeing that their abilities and unique talents are used for the benefit of the business. This helps to grow a motivated, creative and innovative workforce that helps in the full realization of the goals and objectives. In addition, by involving every member of the organization, accountability is enhanced since people are held accountable for their own performance. Forth, through this process, organizations ensure that the available resources are utilized in the most efficient and effective manner, thereby limiting wastage. This helps guarantee consistent and high quality results. Fifth, quality management promotes a culture of continuous improvement (Knowles, 29). As a business strives to meet the demands of the customers, there are improvements made across all the departments in an organiz ation. Through such improvements, the organization becomes well prepared to react swiftly to new opportunities. Finally, businesses are able to base their decisions on facts using the available data and information. This ensures that the organization develops policies and procures that promote the overall growth of the